Lead Reclaim and Rubber Products Ltd Management Discussions

BUSINESS OVERVIEW

Our Company is in the business of manufacturing of reclaimed rubber, crumb rubber powder and rubber granules. We believe that we are one of the few companies in our reclaimed rubber industry that can process scrap of Radial tyre, Nylon tyre, Natural tube & butyl inner tube. Our manufacturing facility employs an extensive and stringent quality control mechanism at each stage of the recycling process to ensure that our finished product conforms to the exact requirement of our customers.

Our Company is in the business of manufacturing of reclaimed rubber, crumb rubber powder and rubber granules. Our Company focus on a) saving valuable natural resources by way of recycling; and b) helping our customers fulfil their circularity aspirations through use of our reclaimed rubber products. We believe that we are one of the few companies in our reclaimed rubber industry that can process scrap of Radial tyre , Nylon tyre , Natural tube & butyl inner tube. Our manufacturing facility is situated at 856/4, Sarali Road Village - Pithai, Taluka- Kathalal, Kheda 387630, Gujarat, which is spread over a total land area of approximately 7790 Sq. mts. with the existing plant occupying approximately 2253 Sq. mts with the total install capacity of 5520 metric tons. Our Company has also purchase land for Manufacturing purpose which is situated at Plot No. B/17, having 1355.54 Sq. Mtr. Total area, Registered No. 2311, Someshwari Industrial Park, Mandali and entering into Lease Agreement of property situated at Agriculture land admeasuring about 12141 Sq. Mtrs. Out of 95911 Sq. Mtrs. bearing Revenue Survey/Block No. 694, Khata No. 632, All situated, lying and being at Mouje: Bordi, Taluka: Thasra, within the registration Sub-District: Thasra and District: Kheda. Our manufacturing facility employs an extensive and stringent quality control mechanism at each stage of the recycling process to ensure that our finished product conforms to the exact requirement of our customers. Our manufacturing facility is accredited with ISO 9001:2015 certifications for quality management system. We are also the member of Rubber Manufacturers Welfare Association.

Our Product Portfolio offers a diversified product range which includes variety of grades, thickness, widths and standards of various grades of whole tyre reclaim rubber, butyl reclaim rubber and natural reclaimed rubber. Currently, we sell our products to companies in the automotive manufacturing sector, distributors and dealers.

At our manufacturing facility, we have an in-house testing laboratory, for testing our raw materials and finished products to match the quality standards as specified and required by our customers. We strive to meet all the environment, health and safety standards in our manufacturing process. Every batch of Reclaimed rubber undergoes various parameters of quality tests.

INDUSTRY OVERVIEW

The Indian Rubber Industry is broadly divided into Natural Rubber and Synthetic Rubber. India is the fifth-largest user of all types of rubber, including synthetic rubber, and the second-largest consumer of natural rubber.

Natural Rubber production in the country during FY24 recorded a positive growth of 2.1% YoY. The growth in production is attributed to several factors such as measures taken by the Rubber Board to increase tapped area, supply of rain guarding materials, continuation of Rubber Production Incentive Scheme (RPIS) scheme, encouraging self-tapping, and other essential agronomic practices to prevent leaf diseases, etc.

Synthetic Rubber production increased 16.9% YoY in FY24. The domestic synthetic rubber production in FY25 (April to October 2024) was at 333,436 tonnes, increasing by 4.8% from 318,053 tonnes produced during the same period last year.

The total rubber area under rubber plantation in the country is estimated to have expanded to 889,000 Hectares (HA) during FY24 from 850,000 HA during FY23. The tappable area under rubber was 753,885 HA during FY24, of which only 577,300 ha (76.6%) has contributed to the natural rubber production during the year, leaving more room for further expansion and growth in production.

Indian rubber cultivation is mostly found in the southern and north-eastern parts of the country, as it has most suitable climatic conditions. The north-eastern region is benefitted with heavy rainfall and humidity, whereas the southern part of India is gifted with widespread coastal area. This climatic combination is very good for the cultivation of rubber trees.

Kerala, Tripura, Karnataka, Assam, Tamil Nadu, Meghalaya, Nagaland, Manipur, Goa, and Andaman & Nicobar Islands are Indias greatest production states. The rubber industry plays a vital role in providing employment opportunities for many farmers ultimately developing rural economy, and supporting various other industries like automobile, healthcare etc.

The volume of rubber exported from the country has increased to 4,199 tonnes in FY24 from 3,700 tonnes in FY23. Export of rubber during the year FY24 is valued at Rs. 55.1 crore (US$ 6.34 million). Of the total rubber exported in FY24 from India, 9.3% was Ribbed Smoked Sheet (RSS), 19.2% latex concentrates and 70.0% Technically Specified Rubber (TSR) in FY24, with Sri Lanka being the biggest importer.

Industry Structure and Developments

The rubber recycling industry forms an important part of the broader rubber and tyre value chain, connecting the collection of end-of-life tyres and rubber scrap with downstream industries that require reusable rubber-based raw materials. The industry broadly comprises manufacturers of reclaimed rubber, crumb rubber, rubber granules and other recycled rubber products which are used across tyre manufacturing, automotive components, industrial rubber products, footwear, flooring and other applications.

India has a large and growing automobile and tyre ecosystem which generates a significant quantity of end-of-life tyres, tubes and rubber scrap. At the same time, the tyre and rubber industries remain substantial consumers of natural and synthetic rubber. This creates an important role for recycling and reclamation, whereby usable rubber is recovered from waste and reintroduced into the manufacturing value chain.

The structure of the industry is gradually evolving from a largely fragmented recycling ecosystem towards a more organised and compliance-driven industry. Increasing emphasis on traceability, quality consistency, environmental compliance and responsible waste management is encouraging customers to engage with organised recycling companies capable of supplying material of consistent specifications. A significant development for the sector has been the introduction and implementation of Extended Producer Responsibility (EPR) for waste tyres. The framework places greater responsibility on tyre producers for ensuring appropriate recycling of end-of-life tyres and recognises recycling processes including reclaimed rubber and crumb rubber. This is strengthening the formal waste-tyre recycling ecosystem and increasing the importance of registered and compliant recycling capacities.

Sustainability and circular-economy considerations are also becoming increasingly important across the automotive and manufacturing sectors. Reclaimed rubber enables useful material to be recovered from discarded tyres and tubes and returned to productive applications, thereby supporting resource conservation and reducing dependence on virgin raw materials to the extent technically feasible. Within this industry structure, Lead Reclaim and Rubber Products Limited is engaged in manufacturing reclaimed rubber, crumb rubber powder and rubber granules. The Companys ability to process different categories of scrap, including radial tyres, nylon tyres, natural tubes and butyl inner tubes, allows it to cater to varied customer requirements and participate across multiple segments of the rubber recycling value chain.

Organised vs. Unorganised Recycling: Formalisation of the Industry

Indias tyre recycling ecosystem continues to comprise both organised recyclers operating within the regulatory framework and a sizeable base of informal and unauthorised operators. According to a January 2026 NITI Aayog study, based on CPCB data as of September 2025, the industry had an estimated 851 recyclers, of which 552 were authorised, 159 had authorisations pending and around 140 were identified as informal operators. When recyclers with pending authorisation are considered alongside informal entities, approximately 300 recyclers represented capacity operating outside full regulatory authorisation.

The presence of an informal sector has historically created differences in environmental compliance, traceability, quality standards and operating costs. However, the implementation of Extended Producer Responsibility, increased regulatory oversight and greater customer emphasis on traceable and consistent recycled materials are gradually creating conditions for formalisation.

For organised manufacturers, this transition can progressively shift competition away from purely price-led procurement towards parameters such as product quality, manufacturing consistency, environmental compliance, traceability and reliability of supply. Over the longer term, greater formalisation can therefore support the development of a more transparent and value-added rubber recycling ecosystem.

GOVERNMENT INITIATIVES

The Government of India encourages foreign investment in the automobile sector and has allowed 100% FDI under the automatic route.

Some of the recent initiatives taken by the Government of India are -

The Ministry of Heavy Industries has launched FAME- III Scheme, with a budget of Rs. 10,900 crore (US$ 1.29 billion) to promote electric mobility and reduce reliance on fossil fuels over a two-year period from April 1, 2024, to March 31, 2026. Under Electric Mobility Promotion Scheme 2024 government aims to support 3,72,215 EVs including e-2W (3,33,387) and e-3W (38,828 including 13,590 rickshaws & e-carts and 25,238 e-3W in L5 category). Ministry of Heavy Industries, Government of India with the approval of Department of Expenditure has launched Electric Mobility Promotion Scheme 2024 to further accelerate the adoption of EVs in the country which is a fund limited scheme with a total outlay of Rs. 500 crore for the period of 4 months, from 1st April 2024 to 31st July 2024. In January 2024, the Ministry of Heavy Industries extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The incentive will now be applicable for a total of five consecutive financial years, until March 31, 2028. In July 2022, Gujarat government announced a semiconductor policy, where it will set up Dholera Semicon City and offered incentives for investment in this sector. In February 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways, revealed plans to roll out Bharat NCAP, Indias own vehicle safety assessment program.

In February 2022, 20 carmakers, including Tata Motors Ltd, Suzuki Motor Gujarat, Mahindra and Mahindra, Hyundai, and Kia India Pvt. Ltd was chosen to receive production-linked incentives (PLI) as part of the governments plan to increase local vehicle manufacturing and attract new investment. The 20 automobile companies have proposed a total investment of around US$ 5.95 billion (Rs. 45,000 crore). In July 2022, Gujarat government announced a semiconductor policy, where it will set up Dholera Semicon City and offered incentives for investment in this sector. As of July 15, 2022, under the FAME India Scheme I & II, a total of 532 EV charging stations have been installed by oil companies under the Ministry of Petroleum and Natural Gas (MoPNG). Ministry of Heavy Industries (MHI) officials revealed that India plans to launch a new scheme to incentivise electric vehicle purchases and improve charging infrastructure, aligning with the interim budgets focus on eco-friendly transportation. Also, the allocation of US$ 321.5 million (Rs. 2,671.33 crore) for 2024-25 is expected to be utilized by March 31, 2024.

OPPORTUNITIES, THREATS AND CONCERN

Opportunities

The long-term opportunity for the rubber recycling industry is supported by the increasing availability of end-of-life tyres and rubber scrap generated from Indias expanding vehicle base and replacement tyre market. A larger tyre ecosystem can progressively create a deeper raw-material pool for organised recyclers while simultaneously increasing the requirement for sustainable material solutions.

The implementation of EPR for waste tyres represents an important structural opportunity for organised recycling companies. Greater emphasis on responsible recycling, documentation and traceability can support increasing formalisation of the sector and encourage tyre manufacturers and other industry participants to develop stronger relationships with compliant recycling partners.

Increasing focus on sustainability and circularity across industries provides another avenue for growth. Customers are progressively evaluating recycled inputs as part of their broader resource-efficiency and sustainability initiatives. Reclaimed rubber can partially substitute virgin rubber in several applications depending upon the technical formulation and performance requirements of the finished product.

There is also an opportunity for Indian manufacturers to improve product quality, develop specialised grades of reclaimed rubber and increase value addition through better processing technology, testing and research and development. Consistency in product characteristics can expand the addressable market across automotive, tyre and industrial applications.

Export markets provide an additional opportunity for Indian recycled-rubber manufacturers that are able to maintain competitive pricing, reliable supply and consistent quality standards. The Company can continue exploring domestic as well as international markets while strengthening its product portfolio and customer relationships.

Threats

The industry remains dependent on the availability and pricing of scrap tyres, tubes and other rubber waste. Increased recycling capacity or competition for suitable scrap material may result in higher procurement costs and affect margins.

Reclaimed rubber also competes with natural rubber, synthetic rubber and other alternative raw materials. Significant fluctuations in virgin-rubber prices can affect the economic attractiveness and consumption pattern of reclaimed rubber.

The industry remains competitive and includes both organised and fragmented participants. Price-based competition from domestic manufacturers or imported products can place pressure on realisations, particularly in relatively standardised product categories.

Increasing environmental, pollution-control and waste-management requirements may require continuous investments in processes, equipment and compliance systems. While stronger regulation can favour organised players over the longer term, changes in regulatory requirements may also increase operating and compliance costs.

Outlook

The outlook for the rubber recycling industry remains supported by the broader transition towards resource efficiency, circular manufacturing and responsible management of end-of-life tyres. Growth in Indias automotive and tyre ecosystem is expected to continue generating both demand for rubber-based products and an increasing pool of recyclable tyre and rubber waste.

The progressive formalisation of waste-tyre recycling under the EPR framework is expected to strengthen the role of organised recyclers capable of maintaining appropriate environmental standards, traceability and product quality. At the same time, increasing focus among manufacturers on incorporating recycled materials within their supply chains can broaden the applications for reclaimed rubber and other recycled-rubber products.

For Lead Reclaim, the emphasis will remain on strengthening its core manufacturing capabilities, improving operating efficiencies, maintaining consistent product quality and broadening customer acceptance across different grades and applications. The Company will continue to evaluate opportunities for product development, value addition and optimal utilisation of its manufacturing infrastructure while maintaining a disciplined approach towards growth.

Over the medium to long term, the Company believes that its presence in the rubber recycling and reclamation industry positions it to participate in Indias transition towards a more circular and resource-efficient manufacturing ecosystem. However, growth will remain dependent on market conditions, availability of raw materials, customer demand, regulatory developments and the Companys ability to maintain quality and cost competitiveness.

Risks and Concerns

The Company operates in an industry where business performance is influenced by developments across the automobile, tyre, rubber and waste-recycling sectors. The key risks and concerns associated with the business include the following:

Raw Material Availability and Price Volatility

The Companys manufacturing operations depend on regular availability of scrap tyres, tubes and other suitable rubber waste. Variations in scrap generation, collection networks, imports, competition for raw materials and procurement prices may impact production volumes and profitability. Maintaining a diversified and reliable procurement network therefore remains important.

Fluctuation in Natural and Synthetic Rubber Prices

Reclaimed rubber competes with virgin natural and synthetic rubber in several end-use applications. Significant changes in the prices of these materials may influence customer formulations, substitution decisions and demand for reclaimed rubber, thereby affecting product realisations and margins.

Environmental and Regulatory Risk

Rubber recycling operations are subject to environmental, pollution-control, waste-management and occupational-safety regulations. Changes in regulatory requirements, restrictions relating to movement or import of waste tyres, or non-compliance with applicable standards could affect operations or result in additional expenditure.

Quality and Customer Acceptance Risk

Customers in the tyre and automotive industries require consistency across parameters such as composition, strength, processing characteristics and overall product performance. Variation in scrap quality or manufacturing processes can affect the characteristics of the finished product. The Company therefore places significant emphasis on quality control and testing at different stages of production.

Competitive Risk

The reclaimed-rubber industry includes numerous domestic manufacturers and other recycling participants. Competition based on pricing, quality, product specifications and customer relationships may affect market share and profitability. Competition from virgin rubber and alternative recycled materials may also influence demand.

Operational and Safety Risk

Manufacturing and storage activities involve handling significant quantities of rubber scrap and finished material. Accordingly, the business is exposed to risks relating to fire, machinery breakdown, workplace safety, storage and material handling. Appropriate preventive maintenance, safety procedures and operating controls are therefore critical to uninterrupted operations.

Energy and Logistics Costs

The processing and transportation of bulk rubber scrap and finished products involves energy and logistics expenditure. Changes in electricity, fuel, freight and transportation costs may affect the overall cost structure of the Company, particularly where increases cannot be immediately passed on to customers.

Technology and Product Development Risk

Customer requirements and manufacturing technologies continue to evolve. Failure to continuously improve processing methods, product consistency and specialised grades could affect the Companys competitive position. Continued focus on process improvement, testing and product development therefore remains important.

Sustainability and Reputation Risk

While recycling of waste rubber contributes positively towards circularity, inappropriate storage, handling, disposal or processing of waste material can create environmental and reputational risks. Maintaining responsible operating practices and adherence to applicable environmental standards will remain an important priority for the Company.

INTERNAL CONTROL FRAMEWORK

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern its business. Your Company has a established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including self-assessment exercises. The Company time to time seek evaluating the adequacy of all internal controls and ensuring that operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements.

PEOPLE AND PRACTICES:

The Board of Directors continues to challenge the management and push for higher targets. The Boards well-rounded experience comprises individuals with experience in tyre industry, Financial Market rubber industry, etc. The Board continues to provide long term direction to the Company and engages actively towards initiatives inputs on the Companys long-term vision.

The Company recognizes the importance and contribution of its human resources for its growth and development and values their talent, integrity and dedication. With the focus to develop leadership talent from within, the Company conduct various programmes. Employee motivation is key to organization success. On these lines, the Company conducts its various social programs and motivate them. As on March 31, 2026, the Company has 39 employees.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your Company has achieved a total income of 3999.25 Lakh during the year under review as against 3125.82 Lakh in the previous financial year. The net profit after tax of the Company for the year under review is 408.52 Lakh as compared to profit of 146.32 Lakh for the previous year. The net profit before tax for the year under review is 569.76 Lakh as compared to profit of 200.46 Lakh for the previous year.

FINANCIAL RATIOS

Particulars	As at 31- 3-2026	As at 31-3- 2025	% Variance	Reasons for Variances
Current Ratio	2.11	2.25	-6.32	-
Debt-Equity Ratio	0.52	0.24	115.81	Increase in Debt
				Increase in
Debt Service Coverage				Earnings available
Ratio	9.19	5.22	75.91	for Debts
Return on equity ratio	18.47	9.36	97.28	Increase in PAT
Inventory Turnover Ratio	9.22	8.17	12.90	-
Trade Receivables Turnover				-
Ratio	8.82	8.13	8.43
				Decrease in
Trade payables Turnover				average Trade
Ratio	23.96	10.67	124.42	Payable
Net Capital Turnover Ratio	3.78	3.53	6.99	-
				Increase in Net
Net Profit Ratio	10.26	4.70	118.21	Profit
Return on Capital Employed	17.79	10.60	67.83	Increase in EBIT
				Increase in
Return on investment	4.24	0.52	708.04	Interest Income

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report containing the objectives, expectations or predictions of the company may be forward-looking within the meaning of securities laws and regulations. Actual results may differ materially from those expressed in the statement. The operations of the Company could be influenced by various factors such as domestic and global demand and supply conditions affecting sales volumes and selling prices of finished goods, input availability and cost, tax laws, economic developments within the country and other factors such as litigation and industrial relations.